Jonathan L. Schwartz, a partner in Goldberg Segalla’s Global Insurance Services Practice Group, provided commentary in a Law360 article examining recent contrasting decisions from the Connecticut Supreme Court and the U.S. District Court of South Carolina regarding whether an insurer can ask a court to decide another insurer’s duty to defend.
Jonathan noted that policyholders that are getting a defense generally have little interest in fights among insurers over sharing defense obligations, though there are exceptions. For instance, he said, policyholders may prefer to receive defense coverage under a policy that covers them as an additional insured rather than through policies where they are a named insured.
Still, insurers do suffer harm when they pay more than their fair share of defense costs, Jonathan said. The South Carolina approach makes it possible for one insurer to shoulder substantial defense costs up front, while another insurer that also owes a duty to defend can sit back.
“There’s encouragement of staring contests among insurers,” Jonathan said. “The first one to blink is the one that has to fund the defense.”